The Senate Foreign Relations Committee will vote today on a resolution that supports the use of force by the U.S. military in Syria with a 90-day limit. Figures due Sept. 6 may show U.S. payrolls increased in August and the jobless rate held at 7.4%. The Fed will hold its next policy meeting on Sept. 17-18. Apple advanced 2.2% to $499.20.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is up 6.75 points today to 1645.50. We believe this market is trading in a very tight range this week as it waits for possible direction from this Friday’s nonfarm payrolls report. The market will also very likely be paying very close attention to the unemployment number as well. We believe the market is not quite sure how to handle a potential tapering announcement either in September or December. We think that, overall, the market could be in longer-term bull market trend, but its upward movement in the short term may be tempered by the potential stimulus reduction plus investors potentially wanting to move to cash during a Syria military strike. We look at 1665 as a key resistance level. We would not be surprised to see this market try to approach the 1600 level on the downside.
Bonds: The SEP13 U.S. 30-year bond market (CBOT:ZBU13) is down 3 ticks today to 130’06. Even though the bonds have dropped about 20 points this year, we believe further downside action could occur, especially on a very strong jobs report this Friday. We believe the next major downside target for the bond futures is the 126 area, based on our technical analysis of the daily chart. It would take a mighty high jobs creation report this Friday to cause a drop in bond prices that would even come close to this level. On the other side if the coin, we are looking at the 130 level as a key decision level. If the jobs number is weaker than expected this week, we might see a reversal in bonds and see a rally back to potentially 131’15, or higher.
Currencies: The SEP13 Aussie dollar (FOREX:AUDUSD) is trading up 126 ticks (+1.39%) today on a stronger than expected GDP data. This time, the Aussie is rallying not because of positive data from big trading partner China, but actually because of data from its own country. We are looking at 92.60 as a key target, and we believe this currency could actually head higher than that. But for now, we believe it might rally to 92.60. It has broken above the key 200-day EMA on a five-hour bar chart. The SEP13 USD is slightly above its 200EMA on the 5 hour barchart, but is down 8 ticks to 82.31. Again, we believe this Friday’s data will potentially play a huge role in the next move in the USD. The SEP13 Yen futures are down 9 ticks to 100.44, and are below the 200EMA. We are showing the Yen could be slightly oversold at this level.
Commodities: DEC13 gold futures (COMEX:GCZ13) are down $22 to $1,390. The 200EMA comes in at $1,340 on the five-hour chart. We believe gold is in a neutral to bearish environment at these levels. DEC13 cocoa futures are up $48 dollars to $2,466, and are significantly above their 200-day EMA at $2,350. We believe the cocoa market seems to be still in its uptrend, and are watching $2,550 as first upside target. DEC13 corn futures are down $.06 to $4.69, and we believe this market might have further downside potential to the $4.40 area.